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UK: InfraStrata announces offtake update for its Islandmagee gas storage project
08 Nov 2018
AIM-listed InfraStrata, the UK quoted company focused on the development of natural gas storage capacity, has announced further progress on the Company's Islandmagee Gas Storage Project as it has received a letter of intent from a major (blue chip) gas trading company regarding potential utilisation of gas storage capacity (the 'Offtaker').
The parties have been in discussions for several months and have now agreed a commercial structure for the utilisation of the storage capacity at InfraStrata's planned Islandmagee gas storage facility as it becomes available.
The commercial framework for the Gas Storage Agreement ('GSA') is proposed to be 12-15 years as an initial term, with further options to extend this, and the capacity charge to be levied by InfraStrata will be made up of several pre-defined elements covering storage. In addition, the costs of cycling the facility will be recharged directly to the Offtaker.
Further negotiations will take place over the coming months before a formal agreement can be entered into, which is targeted to occur before the final investment decision on the Project ("FID"), which is expected before the end of June 2019. It therefore should be noted that this letter of intent is a non-binding agreement and there is no guarantee that discussions will ultimately lead to any contract being agreed with the Offtaker.
The Board of InfraStrata considers that an offtake agreement is a crucial part of the commercial agreements that need be finalised in order for FID to be reached. Further details will be announced in relation to equity and debt funding for the Project, along with the EPC (engineering, procurement and construction) contractor, as they become available between now and the end of June 2019.
John Wood, Chief Executive Officer, commented:
'It's fantastic that we have reached a point where we have agreed a framework that we hope will lead to a formal Gas Storage Agreement and we look forward to working with the Offtaker to finalise the commercial agreement as soon as possible. An offtake agreement clearly underpins the Project and is one of the essential elements required before construction can commence. I would like to thank the teams who have been working hard to bring these discussions to a point where we can progress forward.'
Due to binding non-disclosure agreements that exist between the parties, InfraStrata is unable to release further details of the Offtaker at this time.